Clinton expands Medicare drug plan

$79 million proposal puts $4,000 annual cap on individual's costs

June 25, 2000|By NEW YORK TIMES NEWS SERVICE

WASHINGTON - President Clinton announced a major change in his proposal for Medicare drug benefits yesterday, making it much more generous to millions of elderly people and much more costly to the federal government.

The new proposal came four days before the House of Representatives is scheduled to vote on a Republican proposal to offer drug benefits, through private insurance companies, to all 39 million people on Medicare.

Clinton said his revised proposal would cost $79 billion over five years, or more than twice as much as the $38 billion proposal he sent Congress as part of his budget request in February. The House Republican plan would cost nearly $40 billion over five years.

In his weekly radio address yesterday, Clinton said he was "deeply concerned" about the proposal drafted by House Republicans.

"What they have proposed is not a Medicare benefit," Clinton said. "It's a private insurance program which many seniors and people with disabilities simply won't be able to afford."

Clinton said he wanted to use surplus tax dollars to ensure that no older American would have to pay more than $4,000 a year in drug costs.

The president said he would submit his new proposal to Congress in the next few days. Congress, controlled by Republicans, is unlikely to approve it right away. But experience suggests that Clinton's proposal could influence Congress and nudge it in the direction he wants to go as the legislative process unfolds under the political pressures of this election year.

Clinton said his plan "would be affordable and dependable, and give every senior equal coverage."

In the Republican response, Rep. Nancy Johnson of Connecticut said the House Republican plan was better.

"We provide a choice of at least two plans for seniors," Johnson said. "Under the president's approach, our seniors would have only one choice. The government would mandate a one-size-fits-all plan, and a senior would just have to take it or leave it."

The cost of the president's proposal has soared in the past year, as he offered richer benefits and more realistic cost estimates. When he unveiled his initial plan last June, he said it would cost $118 billion over 10 years. In February, he put the 10-year cost at $195 billion: $160 billion for basic drug coverage, plus $35 billion to help people with very high drug expenses.

Yesterday, Clinton offered what he described as an improved version of his proposal, which he said would cost $253 billion over 10 years. That is more than twice the cost estimate for his original proposal.

The White House said the more generous drug benefits were possible because a booming economy had produced a gusher of federal revenue, increasing projections of the budget surplus in the next decade.

The House Republican proposal was approved on a party-line vote in the Ways and Means Committee on Wednesday. It would use almost all of the $40 billion allowed for drug benefits in the five-year budget blueprint that Congress adopted in April.

Yesterday, a White House official said the administration did not "feel in any way constrained" by the $40 billion figure. Under House rules, it would not be in order to consider a bill that increased Medicare spending by more than that amount.

White House officials said they hoped that the House Rules Committee would allow an exception to the rules, so Democrats could offer an alternative costing $100 billion over five years. The Democratic proposal, besides providing $79 billion worth of drug benefits to the elderly, would increase Medicare payments to hospitals and other health care providers by $21 billion over five years.

Republicans said they agreed on the need to assist health care providers and would offer a separate bill later this year, to restore some of the Medicare money cut in 1997.

Under Clinton's original proposal, the government would have paid half of the first $2,000 in drug expenses incurred by a Medicare beneficiary, starting in 2003. Under the new proposal, benefits would start a year earlier, in 2002. "Seniors and people with disabilities need prescription drug coverage as soon as possible," the White House said.

Clinton specified yesterday, for the first time, how he would protect the elderly who have high prescription drug expenses. Under his proposal, no Medicare beneficiary would spend more than $4,000 a year on prescription drugs. Medicare would pay costs beyond that.

In February, Clinton said he wanted to provide "protection against catastrophic drug costs," starting in 2006, but he gave no details. Yesterday, he fleshed out his proposal and said he wanted to start the extra coverage in 2002, along with the basic benefits.

Under his proposal, Clinton said, Medicare beneficiaries would not have to pay extra for catastrophic coverage. Premiums for the enhanced benefits would be the same as premiums he specified in February for basic drug coverage: $25 a month in 2002, rising to about $50 in 2009.

Under the House Republican plan, the government would pay subsidies to insurance companies to encourage them to sell insurance covering the drug costs of Medicare beneficiaries. Premiums and benefits could vary from one plan to another.

Under a typical policy, the beneficiary would pay premiums of $37 a month and a deductible of $250 a year. The insurance policy would pay half of the next $2,100 in drug costs, and the beneficiary's out-of-pocket costs would be limited to $6,000 a year.